This report discusses the scope of liability of offshore oil facility operators for oil spills and the regulatory regime that monitors such facilities in Australia, Brazil, Canada, Norway, and the United Kingdom. Specifically, information on the governing constitutional principles, potential civil and criminal liabilities, insurance requirements, safety standards, and the role of regulatory bodies in the countries surveyed is provided.
Full Report, (PDF, 444KB)
Australian law does not place any caps on the liability of operators of offshore petroleum facilities in terms of the clean-up and remedial costs resulting from oil spills. Civil penalties, criminal offenses, and actions in tort may also be applicable. Oil companies are required to have adequate insurance coverage for the expenses and liabilities that may arise from oil spills. A National Plan sets out the responsibilities of different entities in responding to an oil spill, with the oil company having primary operational responsibility and assistance being made available from a range of sources.
The government is charged with the responsibility of controlling activities that may pose a risk to life and the environment. Damages to the environment are punishable both administratively and criminally, without prejudice to the duty to repair the harm caused. The essential rules for handling oil and other harmful or dangerous substances are governed by law. Petroleum, natural gas, and the biofuel industry are regulated by a federal agency, with several other agencies involved in the process of environmental control and licensing related activities.
Offshore drilling in Canada is regulated by the federal government on the West Coast and in the Arctic, and by joint federal-provincial bodies off the coasts of Newfoundland and Nova Scotia. Safety standards, liability, limits on liability where there is no illegality or negligence, and punishments are established by law. Responsibilities for responding to oil spills are shared by many federal and provincial agencies.
Under the Petroleum Activities Act (PAA), Norway generally imposes strict liability for pollution damage from petroleum-related activities and has no cap on liability for offshore drilling. Criminal liability applies to willful or negligent acts in violation of PAA provisions and to complicit acts. Proof of insurance is required for petroleum-related activities.
Liability for oil spills rests with the operator on the “polluter pays” basis, with unlimited liability for costs associated with pollution and clean-up. There is a substantial regulatory regime involving many government bodies for offshore installations, most of which are located in the North Sea. For oil pollution, primary responsibility rests with the Maritime and Coastguard Agency.
Last Updated: 02/18/2014